Having a reputation in the UK through advertising is not enough to bring a passing off claim. According to a recent Supreme Court ruling, you also need to operate the relevant business in the UK, selling goods or providing services to UK customers. This is an important decision because conflicting judgments across the common law world have created uncertainty for brands who, in this internet age, can quickly build global reputations.
Passing off is a form of intellectual property claim used to prevent unauthorised use of an unregistered trade mark as well as a registered trade mark. To succeed in a claim, the trade mark owner must show – among other things – that it has a reputation and goodwill in the mark in relation to particular products or services.
In this case, Starbucks (HK) Limited (no relation to the coffee chain) had been operating a closed circuit internet protocol television (IPTV) service in Hong Kong via an encrypted set top box since 2003. The service was launched as NOW BROADBAND TV but in March 2006 it was changed to NOW TV, and by 2012 it had become the largest pay TV operator in Hong Kong with around 1.2 million subscribers. Most NOW TV content was in Mandarin or Cantonese, but the service also carried English language programmes including Sky News. People in the UK could not receive the NOW TV service, but a number of Chinese speakers permanently or temporarily resident in the UK in 2012 were aware of it. In July 2012, BSkyB launched a new IPTV service under the name NOW TV that would be available via the internet (not requiring a set top box). Starbucks subsequently brought a claim against BskyB on the grounds that the use of NOW TV amounted to passing off in the UK.
The lower courts found that Starbucks had acquired a reputation in the UK among members of the Chinese speaking community, based on their exposure to it via YouTube, Starbucks' NOW TV websites and the screening of some NOW TV programmes on international flights. This reputation was modest, but more than 'minor'. However, they held that reputation without goodwill (that is, a customer base in the UK) was not sufficient for a passing off claim.
On appeal, the Supreme Court considered decisions in Ireland, Canada, Australia, New Zealand, South Africa, the US and Singapore in addition to previous English court decisions. For example, in the US and Singapore, the courts seem to follow the approach requiring goodwill in addition to reputation, whereas Australia and South Africa favour the approach supported by Starbucks – allowing passing off to be brought on the basis of reputation alone. The position is less clear in other Commonwealth jurisdictions. Ultimately, although it is open to the Supreme Court to change or develop the law in relation to a common law principle such as passing off, when it has become archaic or unsuited to current practices or beliefs, the Supreme Court declined this opportunity, clearly stating that goodwill remains an essential element of passing off and that reputation alone is not sufficient.
This is yet another case demonstrating the increasing importance of taking a global approach to brand protection in this increasingly globalised world. Further, had this case concerned a more distinctive mark (Starbucks lost its own, earlier, figurative CTM for "NOW" due to a lack of distinctiveness) it may have had a different outcome.
Please contact Mary Guinness for more information.